Speech to Otago Tourism Policy School, QueenstownTourism
How we got here
This conference is framed as a forum to discuss “challenges and opportunities in the field of tourism and sustainable development”.
We have plenty of both before us today.
I am going to take some time to step through the brief you have given me, so bear with me if I take the full 20-30 minutes or so allocated for this speech.
In doing so, I want to canvass issues that confronted us in 2020; issues that are confronting us today in 2021; and issues that are looming for 2022, when we anticipate our international borders will likely open.
The health and wellbeing of New Zealanders required the unprecedented decision to close our border. We made a commitment to preserve life, to protect our communities, and to protect our health workers.
Our emphasis from the very beginning of the COVID-19 pandemic was that a strong health response was also the best economic response.
We remain steadfast in this view.
Since February 2020, surges of COVID-19 infection and months of subsequent lockdowns has devastated the lives and livelihoods of billions around the world.
And although we can gather in this enclosed space today because of the measures we have taken and because of the great sacrifices all New Zealanders have made, I know from speaking to you over these past weeks and months that the toll on the tourism and hospitality sector has been devastating.
It has been devastating worldwide.
The UN World Tourism Organization (WTO) has found that in 2020 global tourism suffered its deepest crisis on record with a drop of 74% in international visitors.
Asia and the Pacific reeled from an even greater impact with an 84% decrease in international arrivals in 2020, or about 300 million less arrivals than in the previous year.
And the reality from the WTO is that the global tourism outlook will not improve for some time yet; and could, in fact, significantly worsen.
Support during change
Change of the magnitude of a global pandemic is incredibly hard to come up against. It’s hard on our businesses, of course, but it’s hard on our communities, and it’s hard on our families too.
It is harder still when the change is so sudden and so total.
The Government’s initial response was to act, but we initially only had imperfect information to act on.
Rightly, we worked with what was available to us under such extraordinary circumstances, and moved quickly to introduce support packages for people and businesses.
The Government invested $400 million in tourism recovery alone. To date this is the greatest single amount invested in tourism in New Zealand’s history.
This amount also included $299 million in cash grants and loans for 130 businesses and $20.2 million for New Zealand’s 31 Regional Tourism Organisations.
It helped to protect valuable and vulnerable tourism assets.
It helped our communities to implement local destination management and planning, and to encourage more New Zealander’s to explore their communities.
Tourism businesses could also access broader social support, such as the COVID-19 Wage Subsidy Scheme and the COVID-19 Small Business Cashflow Scheme.
Indeed, it is estimated that tourism and hospitality businesses received $1.8 billion in wage subsidies and $300million in zero-interest small business loans.
Mindful of the pressure from alert level changes, the Government recently extended the COVID-19 Wage Subsidy Scheme for those businesses affected by the rise in alert levels from 4 March 2021.
The Government has also maintained international air connectivity throughout the pandemic with the International Air Freight Capacity Scheme.
This scheme supports airlines to operate flights to-and-from New Zealand. This has maintained flows of high-value exports and critical imports, but also, links to key visitor markets that will be much needed to recover both inbound and outbound tourism when it is safe to re-open the border again.
The Government followed up the wide-ranging and far-reaching support packages with the heavily promoted domestic tourism campaign ‘Do Something New, New Zealand’.
And although domestic tourism spend was up 24 per cent to $1.17 billion in January of this year at the summer peak, compared to January of 2020, total visitor spend has fallen 11% overall, exposing the gap still felt by the absence of our international visitors.
Of course some communities have been hit harder than others, and I speak from one of these today.
However, these emergency interventions were only ever sustainable in the short-term.
What these interventions did though was buy time for people.
They bought time for people to adapt, if they could, to downsize, if possible, to have hard conversations with their financial advisers, and honest conversations with their employees.
So what are the next difficult and hard questions that confront us, as policy makers.
The reality is that we have a responsibility to take an intergenerational view of the role of tourism in New Zealand.
It can’t go back to how it was.
I believe that in a number of places, the industry was beginning to erode its social licence to operate, and therefore losing the community’s support for continued growth of the sort we were seeing.
Perhaps we had also passed the tipping point, in some key iconic spots, of not delivering on our global brand of 100% Pure.
This sentiment is echoed by a number of industry experts in the book ‘100% Pure Future, New Zealand Tourism Renewed’
The contributors view the interruption to tourism by the COVID-19 pandemic as an opportunity to take a long, hard look at the sector and chance to fix the long-standing issues in the tourism system today.
This is a viewpoint I have echoed myself.
I am leading a programme of work that will move from volume to value as a determinant of success, and the core of our global marketing strategy.
It is also a central thesis of the work undertaken by Grant Webster, Steve Chadwick, the Tourism Futures Taskforce and its Advisory Group.
Their independent report on the future of tourism in New Zealand will be published soon.
I want to acknowledge all the hard work the Taskforce has put in here, and I know that the sector is keen to read it.
I understand at least ten members of the Taskforce, and its Advisory Panel, are participating in this conference. So a heartfelt thanks for your input and work, it is very much appreciated.
Pressure has been building
Pressures from visitor growth over the past decade or so have highlighted that the challenges need to be more carefully thought through than they have been in the past.
Indeed, Queenstown is one of the places where the calls for the need to address tourism have been the loudest. In particular on: traffic congestion, accommodation prices, road accidents, and staff shortages.
The November 2019 ‘Mood of the Nation’ research done for the tourism industry found that 78 per cent of residents here were more likely to think there was too much pressure from international visitors.
That was more than double that of the New Zealand population in general.
But, for the time being we must continue to balance the exceptional circumstances of the tourism sector, with the needs of communities, and with the paramount requirement to continue to maintain the safety of New Zealanders.
And we will make sure when the border is reopened that it is done safely and it is done correctly.
Now’s the time for change
However, there is plenty of work to do now to prepare for when international visitors do return.
Members from the sector, industry experts, and I think most New Zealanders, all recognise that prior to COVID-19, unsustainable tourism levels put far too much undue pressure on communities and our natural attractions and many communities have struggled to absorb.
In addition to the calls from the public, the tourism industry, from small communities, the Government has received multiple pieces of advice and reports that outlines the significant challenges we face today.
So we have a very good understanding of the lay of the land, and it’s time to take action.
In 2020 we moved to get cash out the door quickly, directly to affected businesses, some of whom are represented in this room today.
As we said at the time, we had to move fast, with a no regrets approach.
That was 2020.
I accept that Tourism needs further help in 2021, before we prepare for big changes in 2022.
While a significant work programme lies ahead, recovery comes first.
A significant work programme, but recovery comes first
I am deeply concerned about the situation unfolding in communities like Queenstown, the West Coast, Fiordland, MacKenzie District and Kaikoura that are so reliant upon international tourism.
I am considering structural and targeted initiatives to support some of the worst affected communities.
I am proposing a three-part work programme.
My first priority is to support those communities most affected by the loss of international tourism.
But it’s important to say for the record – we are not considering a regional wage subsidy. It is not sustainable nor fair.
The wage subsidy, like resurgence payments, operates on the same principle for all businesses nationwide that have a drop in revenue
Also for the record, we are not going back to the model of STAPP grants. We have heard loud and clear that’s not what the industry wants.
Further support for tourism requires a more structural and targeted approach that goes to the heart of business operations, and jobs, for those who need it most
I have been talking to tourism businesses and local government leaders, and fellow Ministers, about possible interventions
I hope to shortly outline a number of measures with the following objectives:
- A targeted focus on those areas that have fallen the furthest, those regions where there is a heavy reliance on international tourism
- The advice is that South Westland; Queenstown Lakes; Fiordland; MacKenzie District-Aoraki Mt Cook; and Kaikoura have taken bigger hits than many
- The second objective is to enable tourism businesses to make hard decisions around their current operations.
- This may require us to help make advice available from those who have deep expertise and experience, in areas like business continuity in times of extreme uncertainty.
- This may require steps to make it easier to hibernate or suspend a company, and then provide support when they are ready to start up again
- This is because we want to then ensure those tourism businesses that do choose a form of suspension don’t face a significant financial burden when gearing up to open once international tourists start arriving.
- We also want to help regional leaders to diversify their local economies in order to improve their long-term resilience.
- Regions heavily reliant on international tourism, dare I say it – overly reliant on international tourism, should have a range of alternatives because we don’t want to be in this situation again.
- Central government is doing its part by stepping in with support for infrastructure and regional economic development, and redeploying tourism workers into jobs on the Conservation Estate or for infrastructure builds.
- I believe we can do more in terms of energising economic diversification.
- And the fifth and final objective is to support the mental health needs and psycho-social needs of workers and business owners in those regions that are having the hardest time.
We all want tourism to transition to more sustainable practices. But we cannot leave people and communities behind.
I do recognise that in some areas, it’s not simply about supporting tourism businesses, but ensuring communities survive.
In fact, the region that has had the biggest hit with the loss of international tourism is Auckland.
However all advice tells us that when the Auckland tourism sector suffers in this way, it doesn’t bring down whole communities, like it may in other regions with a significantly higher economic exposure.
Which brings me to next steps – the long term picture for tourism once international visitors return, likely in 2022
From recovery to transition: my vision for the future of tourism
The latter two parts of the work programme include policy changes, and sectoral changes.
In policy, I will be following through on changes to the freedom camping regime.
And I would like to see changes in pricing strategies across our public assets, so that they become financially self-sustaining.
I would like this to include a closer look at existing local levies, changes to the International Visitor Conservation and Tourism Levy.
I will be working closely with the Minister of Conservation on her approach to pricing for public conservation lands and waters.
The third part of the work programme will require the sector to step up and co-own and co-invest in this change.
This could mean developing Industry Transformation Plans (ITP) in partnership between government, business, workers and Māori.
ITPs are going to be a key component of lifting the productivity, sustainability and inclusivity of the tourism sector.
And in a town like Queenstown which is a year-round tourism destination, the workers in your tourism businesses must have year-round secure housing
This work programme is an extension of my overarching four principles for tourism which I outlined to the Tourism Industry Aotearoa conference last year.
We have an opportunity to re-shape tourism so that when the border does re-open, visitors, the sector, and our local communities are operating on a much improved model.
If we are to be one of the top three, globally aspirational destinations, we need our tourism sector to be productive, sustainable, inclusive and innovative.
We must be able to deliver on our global value proposition and our brand promises.
It is imperative that our tourism sector improves the wellbeing of New Zealanders and protects and restore our natural environment.
This is needed in order to regain the social licence that is so important to take New Zealanders along on our journey of re-imagining tourism, post-COVID.
When international visitors return, I am adamant that the tourism sector will be transformed in a way that emphasises value and social licence in a way that we were not delivering before.
We have to now take an inter-generational approach.
My four principles that will guide this transformation should be familiar to you. They are as follows:
‘Brand New Zealand’ and our global value proposition
Firstly, I want to enhance ‘Brand New Zealand’ and refresh our global value proposition.
We must elevate our brand so that New Zealand is seen as one of the most aspirational global travel destinations.
Then it will be Tourism New Zealand’s role, to turn this aspiration into action.
Our natural environment is critical to our wellbeing, our culture, our global brand, as well as our national identity.
New Zealand’s reputation for sustainability and environmental integrity is a core part of our export brand
It is one of a number of reasons I am targeting the unsustainable burden of a sub-section of our freedom camping sector.
As we continue our COVID-19 recovery, we’re investing in nature to support thousands of people into jobs now, and to enhance our environment for generations of kiwis and foreign visitors to come.
Elevating our brand also involves enhancing it. We want to do this in order to support the move to a ‘higher value’ international visitor.
I would like to establish New Zealand as the #1 destination for unparalleled quality and safety, against which others are measured, and make New Zealanders feel proud of what our country offers to the world.
This is aspirational but in my opinion not impossible. Our mission should be to be the best in the world.
An opportunity to re-set & rebuild on a sustainable model
My second principle is to make this an opportunity to re-set and rebuild tourism on a financially sustainable model.
There are very real concerns about the sustainability of tourism as it existed pre-COVID.
These have been echoed by experts and documented in recent reports, including in February’s Parliamentary Commission for the Environment report ‘Not 100% - but four steps closer to sustainable tourism’.
We must take the opportunity we have now to re-set the operating model for the sector on a far more sustainable and resilient basis, and we need to do this before international visitors return.
Work is underway in this regard, since the adoption of the Government’s New Zealand-Aotearoa Tourism Strategy.
Tied directly to this is my intention to build more meaningful partnerships with Treaty Partners to ensure effective and on-going engagement with Māori.
I will always encourage, enable and support partnerships between Māori tourism enterprise, iwi, hapū and tangata whenua, government, industry, businesses, regions, as well as communities, to engage and collaborate on projects that lead to improved tourism outcomes.
Our culture is one of our global competitive advantages and we should work hard to tell our unique and wonderful stories, and to be inclusive at every point in the tourism journey.
Destination Management has also been a key part of ensuring that community aspirations drive the tourism offering, including for residents, iwi, DOC, local government, and the sector.
Destination management covers infrastructure, environmental, cultural, and social dimensions of tourism offerings. It aims to develop a regional proposition that delivers exceptional experiences for both international and domestic visitors.
In alignment with that work, I will shortly open Round Five, the final round, of the Tourism Infrastructure Fund (TIF).
The TIF was established in 2017 and earmarked $100 million over four years to support local government by co-funding projects to build and maintain visitor-related public infrastructure.
This co-funded approach is required because local government, especially those councils with small rating bases, cannot fully cope with the costs of visitors
Taxpayers and ratepayers are bearing a big share of the cost of the visitor experience – surely one of the few sectors where this happens.
I am taking advice about how to ensure that Round Five of this fund is targeted at the handful of regions that need it most.
That will be clearly set out in the priorities statement that guides applications for the Fund.
Costs of tourism are priced into the visitor experience
My third principle is to ensure that costs associated with tourism are priced into the visitor experience.
As I’ve said, the costs and benefits from tourism do not always fall in the same place.
There are also a number of negative environmental impacts as outlined in the PCE report, such as biodiversity loss, solid waste, greenhouse gas emissions, and water quality degradation.
There are also intangible impacts on communities from seasonal work and seasonal tourism patterns,
Industry as partners in transformation
My fourth principle is to welcome industry as partners in this transformation.
Government and the sector have been intertwined throughout New Zealand tourism’s history.
This won’t change, but it will need to evolve to meet the challenges of the 21st Century.
I want to be clear that the sector must co-own and co-invest in its future and the necessary changes required for tourism to enrich New Zealand.
This will require real industry leadership and commitment.
And we’ve seen how good this commitment can be with, for example, the resounding support shown by the industry in signing up in large numbers to the Tourism Sustainability Commitment, and the real interest in the work of the Tourism Futures Taskforce.
I have no doubt that we will be able to unlock similar levels of action and engagement in the future.
The status quo cannot, will not be the model of the direction of tourism. That much is clear.
It is unsustainable, it lacks resilience, and we won’t go back to how it was.
The world has been changed by COVID-19, and so we must change with it.
The argument for not doing all we can to transform the sector is utterly untenable in 2021.
I have outlined my four principles to lead us off on the transformation journey:
- We must make the necessary changes to ensure ‘Brand New Zealand’ is seen as one of the world’s most aspirational global travel destinations.
- We have an opportunity to re-set and rebuild tourism on a sustainable model and the industry simply cannot return to ‘business as usual’.
- The costs and negative impacts associated with tourism must be mitigated or priced into the visitor experience, and not funded by New Zealand rate and tax payers.
- The Government intends to partner with the industry, both businesses and workers, and this is essential to achieve this transformation.
We have an opportunity now, while the borders are closed, to re-shape tourism so that when we re-open, and international visitors return in meaningful numbers, the sector, and our host communities are operating on more assured model.
There’s a lot of work to do, but I want to reiterate that we won’t leave our worst affected communities behind.